The Trade Activity Index (TAI) returned to positive territory in February, improving to 54 points, mainly as a result of improvements in the sales and new orders subindices, the South African Chamber of Commerce and Industry (Sacci) reported on Wednesday.

After measuring 51 points in November, the index dropped to 42 in December and recorded 44 points in January, owing to seasonal influences.

Sacci noted that the sales volumes subindex of the TAI had increased by 15 points to 61 in February, rebounding from the 14-point drop recorded in December.

The new orders index also improved by eight points to 55 in February, up from 39 in December and 47 in January.

Further, the supplier deliveries index climbed eight points to 50, while the inventory index increased by one point to 47, which indicated that restocking might have slowed down for now, given the undertainty about the strength of the domestic economic recovery, stated Sacci.

The selling prices index rose by three points to 54, while the input price index increased by three points to 61.

“This indicates that inflationary pressures are mounting particularly from input costs including the diesel price, which is now 15,1% higher than a year ago. Substantial direct and indirect electricity cost impacts will add to inflationary pressure in months to come,” the chamber pointed out.

Meanwhile, respondents to the trade activity survey remained optimistic about the 2010 FIFA World Cup and a stronger economic recovery in the second half of this year, pushing the Trade Expectations Index (TEI) to 68 points, up from 67 in January.

The sales expectations index rose to 77 points in February, up from the high of 76 recorded in January.

However, expectations for new orders fell by two points to 70.

The index on six month prospects for supplier deliveries increased from 64 points to 67 in February.

“The indices on expected selling and input prices for January 2010 suggest that inflationary expectations have declined in February 2010. The input price expectations index declined by two index points to 70, while the selling price expectations index declined by one point to 67 in February 2010,” stated Sacci.

Meanwhile, the TAI employment index improved to 48 points, up seven points from January, which could suggest fewer lay-offs, said the Chamber.

Further, the employment prospects index improved to 57 points, up from the 55 recorded in January.

“The index is well into positive territory for the fourth time since November 2009 and supports greater employment opportunities in the trade sector over the medium term,” Sacci pointed out.